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Bill

SB 5576

Providing state funding for essential affordable housing programs.

2025-2026 Regular Session Introduced by Emily Alvarado and 9 co-sponsors

Authorizes local 4% short-term rental tax to fund essential affordable housing, directing revenue to housing, rental assistance, and related services via a dedicated state account.

By resolution, returned to Senate Rules Committee for third reading.
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Bill Summary · SB 5576

Bill Summary — SB 5576 (2025): Providing state funding for essential affordable housing programs

Status: By resolution, returned to Senate Rules Committee for third reading (last action 2025-04-27)
Introduced: January 29, 2025
Sponsor(s): Senate Committee on Ways & Means (original sponsors: Senators Lovelett, Alvarado, Saldaña, Bateman, Salomon, Valdez, Hasegawa, Nobles, C. Wilson, Ramos)
Effective date (if enacted): generally 90 days after adjournment of the session in which the bill is passed (per committee reports)

Purpose / Intent

To create a local-option revenue source dedicated to funding “essential affordable housing” programs by authorizing counties, cities, and towns to impose a new special excise tax on short‑term rentals (STRs). Revenues are restricted to housing-related capital and operating needs, rental assistance, and supportive services.

Key provisions

  • Local option STR tax

    • Authorizes counties, cities, and towns to impose a special excise tax on the sale/charge for furnishing lodging of short‑term rentals.
    • Maximum rate: 4% (must be adopted in 1% increments).
    • Applies to STR transactions (definitions align with RCW 64.37.010). The Department of Revenue (DOR) collects the tax on behalf of local governments at no cost to them.
    • Local legislative body must first adopt a resolution of intent and then adopt enabling legislation; both require a simple majority.

  • Use of revenues

    • All proceeds go into a newly created Essential Affordable Housing Local Assistance Account in the state treasury.
    • Local receipts (distributed monthly) must be used exclusively for:
    • Acquiring, rehabilitating, or constructing affordable, workforce, or supportive housing (including new affordable units within existing structures);
    • Operations and maintenance of such housing;
    • Rental assistance to tenants;
    • Funding operations of nonprofit/social service organizations providing housing‑related assistance (employment, utilities, food, child care, etc.).
    • Local governments may retain up to 15% annually of collections for direct and indirect administrative costs.
    • Localities may enter interlocal agreements to jointly undertake projects.

  • Exemptions, reporting, administration

    • Localities may exclude STRs located in certain common‑interest communities (resort/second‑home/vacation communities) or properties exempt from local STR regulation.
    • Localities imposing the tax must publish an annual report (by March 1) showing prior‑year use of revenue.
    • Moneys in the state account may be withdrawn only for monthly distributions to local governments and for tax refunds.
    • Local governments may not impose the tax before April 1, 2026.
    • Administrative and collection rules from existing lodging tax statutes are applied to the extent consistent.

Procedural history / notable amendments

  • The bill evolved through substitute and amendments in Ways & Means, Finance, and Appropriations committees. Early drafts included a statewide 6% STR levy; the engrossed substitute adopted the local‑option 4% structure described above.
  • House committees recommended do pass as amended; the bill passed the Senate (third reading 3/11/25) and was later returned to the Senate Rules Committee by resolution (4/27/25).

Who would be affected

  • Local governments (counties, cities, towns): may adopt the tax, administer programs, receive monthly distributions, and retain up to 15% for administration.
  • Short‑term rental operators/guests: the tax applies to STR transactions (collected by DOR).
  • Affordable housing providers, nonprofit service organizations, tenants, and communities seeking housing resources: potential beneficiaries of dedicated local revenue.
  • Short‑term rental markets and tourism economies could be indirectly affected where local jurisdictions adopt the tax.

Transparency and oversight

  • Annual public reporting requirement (post‑collection year).
  • DOR collection and monthly deposit to the state account; funds are dedicated to stated housing uses only.

If you want, I can prepare a one-page brief comparing this bill to existing lodging‑tax authority and showing sample revenue estimates for a county or city with X STR bookings.

Compiled from official sources — confirm details with the bill’s official record.

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